Minting Mechanism for Proof of Stake Blockchains

Dominic Deuber, Nico Döttling, Bernardo Magri, Giulio Malavolta, Sri Aravinda Krishnan Thyagarajan

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

As an alternative for the computational waste generated by proof-of-work (PoW) blockchains, proof-of-stake (PoS) systems gained a lot of popularity, being adopted by many existing cryptocurrencies. Unfortunately, as we show, PoS-based currencies, where newly minted coins are assigned to the slot leader, inevitably incentivises coin hoarding, as players maximise their utility by holding their stakes and not trading. As a result, existing PoS-based cryptocurrencies do not mimic the properties of fiat currencies, but are rather regarded as investment vectors. In this work we initiate the study of minting mechanisms in cryptocurrencies as a primitive on its own right, and as a first step to a solution to mitigate coin hoarding in PoS currencies we propose a novel minting mechanism based on waiting-time first-price auctions. Our main technical tool is a protocol to run an auction over any blockchain. Moreover, our protocol is the first to securely implement an auction without requiring a semi-trusted party, i.e., where every miner in the network is a potential bidder. Our approach is generically applicable and we show that it is incentive-compatible with the underlying blockchain, i.e., the best strategy for a player is to behave honestly. Our proof-of-concept implementation shows that our system is efficient and scales to tens of thousands of bidders.

Original languageEnglish
Title of host publicationApplied Cryptography and Network Security - 18th International Conference, ACNS 2020, Proceedings
EditorsMauro Conti, Jianying Zhou, Emiliano Casalicchio, Angelo Spognardi
PublisherSpringer Berlin
Pages315-334
Number of pages20
Volume12146
ISBN (Print)9783030578077
DOIs
Publication statusPublished - 2020

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume12146 LNCS
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

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